How corporates and venture builders successfully build startups together

Marc Zuckerberg once said: “If we don’t create the thing that kills us, someone else will”.

This quote perfectly captures the importance of new business building.

Research by McKinsey shows that more and more corporates are recognizing this importance:

📈 It facilitates the development of solutions for internal challenges.

🎯 You create solutions that solve the problems of your target audience.

🌱 Take advantage of emerging business opportunities in the ecosystem.

📖 There is no more effective method to learn a lot about the needs of your target audience, the market, and the surrounding ecosystem.

The combination of a corporate and a startup is incredibly powerful. Both have unique strategic advantages that form the gateway to ventures that make impact.

Corporate strengths include deep market knowledge, financial strength, customer and problem access, and access to talent.

Startups, on the other hand, boast bootstrapped beginnings, pivot capabilities, lean methodologies, out-of-the-box thinking, and a culture of entrepreneurship.

Corporate Venture Building can thus pave the way for innovation and societal impact.

All very positive, right?

Nope! ❌

Unfortunately, most numbers show that this opportunity has not yet matured on a large scale.

Why?

Corporates that want to start with new business building often begin with in-house venture building teams.

These teams engage in identifying, developing, and scaling new business opportunities, and consequently, they create new companies or products around them.

Unfortunately, the level of innovation within Corporate Venture Building teams remains limited.

This is the result of a dominant or tangible corporate culture within the venture building team 🏢

The tangible corporate culture results in:

1. Risk-averse behavior

2. Slow decision-making

3. Lack of autonomy

4. Lack of action

5. Unclear goals

And no, this is not just my gut feeling; it is supported by various studies. Links are provided in the comments.

Where startups need to function as speedboats, corporate venture building teams often resemble the corporate oil tanker.

And that’s a shame. Opportunities to innovate and make societal impact are being missed.

The solution? Detach corporate venture building teams from the corporate entity.

Where startups need to function as speedboats, corporate venture building teams often resemble the corporate oil tanker due to their dominant corporate culture.

Therefore, you want to detach the venture building / innovation team from the corporate entity.

Research from Indiana University indicates that autonomy for Corporate Ventures is the determining factor in the venture’s performance.

Place the speedboat outside the oil tanker. Utilize the strength of the corporate, reap the benefits of a startup, and bring them together in the right environment.

In short, create a genuine startup culture and environment.

This results, among others, in the following benefits:

🤝 Blended teams: A corporate intrapreneur working alongside a venture building team.

📖 Existing assets: The corporate brings customers and supply chains. The builder adds startup expertise and services.

👥 Culture: Operating within a startup culture.

📊 Data-driven innovation: Ideas are evaluated through a structured process and either rejected, pivoted, or further developed as needed.

🚀 Speed: Experience, tools, and playbooks enable exceptionally rapid action. The startup mentality provides flexibility and the ability to change course quickly.

This is – in short – how we believe the success rate and societal impact of corporate venture building can be greatly increased.


Resources:

The Gallery (2023). Dissecting the Corporate Innovation Studio Model with Elliott Parker, CEO of High Alpha Innovation. https://youtu.be/9EblFpEOdiY?si=-DLasQx0KthVGT7n. 

McKinsey (2020). Why business building is the new priority for growth. 
https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/why-business-building-is-the-new-priority-for-growth 

Pioneers (2023). The unfair advantage of corporate venture building.
https://pioneers.io/the-unfair-advantage-of-corporate-venture-building/ 

Ries, E. (2017). The startup way: how modern companies use entrepreneurial management to transform culture and drive long-term growth. Currency.

Kwiatkowski, C. (2016). Characteristics of the Start-up Culture from the perspective of Organizational Culture Model. Czech Journal of Social Sciences Business and Economics, 5(3), 28-37. 

Bouchard, V. & Fayolle, A. (2018). Corporate entrepreneurship. New York: Routledge. 

Burgelman, R. A. (1983). A process model of internal corporate venturing in the diversified major firm. Administrative Science Quarterly, 28: 223–244.

Dess, G. G., Ireland, R. D., Zahra, S. A., Floyd, S. W., Janney, J. J., & Lane, P. J. (2003). Emerging issues in corporate entrepreneurship. Journal of management, 29(3), 351-378.

Kanter, R. M. (1983). The change masters. New York: Simon & Schuster.

Kotter, J. P. (1995). Leading change: Why transformation efforts fail. Harvard Business Review, 73(2): 59–67.

Sharma, P., & Chrisman, J. J. (1999). Toward a reconciliation of the definitional issues in the field of corporate entrepreneurship. Entrepreneurship Theory and Practice, 23(3): 11–27.

Covin, G., et al., (2019). Internal corporate venture planning autonomy, strategic evolution, and venture performance. Kelley School of Business, Indiana University. 

Ries, E. (2017). The startup way: how modern companies use entrepreneurial management to transform culture and drive long-term growth. Currency.